Best Stop Loss Order Indices Trading Strategy

Indices Stop-Loss Order

Stop Loss Indices Order is a type of order placed after opening a indices trade that is meant to cut losses if the indices market trend moves against you.

Stop Loss Indices Order is a predetermined point of exiting a losing indices trade & it's meant to control losses in stock indices trading.

A stop-loss order is an order placed with your indices broker that will automatically close your open indices trade order when the stock indices price of your open indices trade order reaches a predetermined indices price. When set level is reached, your open indices trade is liquidated.

These stock indices orders are designed to limit the amount of money that trader can lose: by exiting the indices trade order if a specific stock indices price that is against the indices trade is reached.

For example, a indices trader might open a buy indices trade and put a stop loss of 20 pips, if the stock indices price moves against the indices trader by 20 pips the stop loss stock indices order will be filled and the indices trade will be liquidated thereby limiting the loss to 20 points (pips) - Setting Indices Stop Loss Trading Order Techniques.

Regardless of what you might be told by other stock indices traders, there is no question about whether these stop loss stock indices orders should or should not be used – stop loss stock indices orders should always be used.

One of the most difficult things in indices trading is setting these stop loss orders - Best Stop Loss Order Indices Strategy – Best Stop Loss Indices Order Strategy for Indices Trading. Put the stop loss stock indices order too close to your entry stock indices price and you're liable to exit the indices trade due to random market volatility. Place the stop loss stock indices order too far away and if you are on the wrong side of the indices trend, then a small loss could turn into a large loss.

Critics will point out several disadvantages of these stop-loss orders: that by placing them you're guaranteeing that if should your open indices trade position move in wrong direction, you will end up selling at lower indices prices, not higher.

The skeptics will also argue that in setting indices stop-loss orders you're vulnerable to exit a indices trade order just before the indices market moves in your favor. Most traders have had the experience of setting a these stop loss stock indices orders and then seeing the stock indices price retrace to that stop loss order level, or just below it, and then go in the direction of their original indices market trend analysis. What might have been a profitable indices trade position instead turns into a indices trading loss.

Professional indices traders always use stop loss stock indices orders as they are an important part of the discipline required to succeed in indices trading because stop loss stock indices orders can prevent a small loss from becoming a large loss. What's more, by diligently setting these stop loss stock indices orders whenever you enter a indices trade position, you end up making this important decision at the point in time when you are most objective about what is really happening with the indices market, this is because the most objective indices technical analysis is done before opening a indices trade order. After entering the indices market a indices trader will tend to analyze the stock indices trading market differently because they have a bias toward one side of the stock indices trading market, the direction of their indices analysis - Best Stop Loss Indices Order Strategy for Indices Trading.

Unexpected indices economic news reports can come out of the blue and dramatically affect the indices price: this is why it is so important to have a stop loss stock indices order set for your open indices trade. It is best to cut indices losses early when a indices trade position is going against you, it's best to cut your indices losses immediately rather than waiting for loss to become a big one. Again, if you set your stop loss stock indices orders when you are entering a indices trade, then that is when you are most objective as a indices trader - Best Stop Loss Order Indices Trading Strategy.

Best Stop Loss Stock Indices Order Strategy for Indices Trading

A key indices question is exactly where to place this indices stop loss order. In other words, how far should you place this indices stop loss below your purchase indices price? Many indices traders will tell you to set a predetermined – maximum acceptable loss per indices trade, an amount based on your indices account balance rather than use indices indicators for calculating where to place the stop loss stock indices order - Best Stop Loss Indices Order Strategy for Indices Trading.

Professional money managers advice that you should not lose more than 2% of your indices account equity on any one single indices trade order. If you have $10,000 in indices trading capital, then that would mean that the maximum loss you should set for any one indices trade order is $200 - Best Stop Loss Order Indices Trading Strategy.

If you opened a indices trade then that would mean that you would limit your risk to no more than $200 for that particular indices trade. In that case you would set your stop-loss order at 200 or equivalent number of pips based on your indices position size of the indices trade that you've opened - Indices Stop Loss Trading Order Example - Indices Stop-Loss Order - Indices Stop Loss Trading Order Calculator. The topic of indices risk management is a wide topic and it is covered under learn indices money management topics.

• Stock Indices Money Management Introduction - Factors to Consider When Setting Stop Loss Indices Orders
• Stock Indices Money Management Methods - Indices Stop Loss Trading Order Example - Indices Stop-Loss Order - Indices Stop Loss Trading Order Calculator

Stock Indices Stop-Loss Order

The most important question is how close or how far this stop loss stock indices order should be set from the stock indices price where you entered the indices trade position. Where you set the stop loss stock indices order will depend on several factors:

Since there are no rules set in stone as to where you should set these stop loss stock indices orders on a indices chart, we follow general stop loss stock indices order setting guidelines used to help place these indices stoploss orders in the correct way.

Some of the general stop loss stock indices order setting guidelines used are:

1. Risk Percentage – How much is a indices trader willing to lose on a single indices trade order. The general indices stop-loss trading order setting rule is that a indices trader should never lose more than 2 percent of the total indices trading account capital on any single indices trade order.

2. Stock Indices Market Volatility -indices market volatility refers to the daily stock indices price range movement of the indices instrument that you're trading. If a indices instrument routinely moves up & down in a range of 50 pips or more over the course of the day, then you can't set a tight stoploss when you open a indices trade. If you do, you will be taken out of the indices trade position by the normal indices market volatility.

3. Indices Trading Risk:Reward Ratio - this is measure of potential reward to risk calculated before opening a indices trade. If the indices market conditions are favorable then it is possible to comfortably give your indices trade more room. However, if the stock indices trading market is too choppy it then becomes too risky to open a indices trade order without a tight stop loss - then don't make the indices trade at all. The indices trading risk to reward ratio is not in your favor & even setting tight stop loss stock indices orders will not guarantee profitable results. It would be wiser to look for a better indices trade position to next time.

4. Indices Trade Position Size - if indices trade position size opened is too big then even the smallest decimal stock indices price movement will be fairly large in risk percentage terms. This means that you've to set a tight stop-loss for your indices trade which may be taken out more easily. In most cases it is better to adjust to a smaller indices trade position size so as to give your indices trade more space for stock indices price volatility movement, by setting a reasonable indices stop loss level for this stop loss stock indices order while at the same time reducing the indices risk for the indices trade.

5. Indices Account Capital - If your stock indices account is under-capitalized then you will not be able to set your indices stop-loss orders accordingly, because as an investor you'll have a large amount of money that is invested in one single indices trade position which will force you to set very tight indices stop loss trading orders. If this is the case, you should think seriously about whether you have enough capital to trade Stock Indices in the first place.

6. Stock Indices Market Trend Conditions - If the stock indices price is trending upwards, a tight stop might not be necessary. If on the other hand the stock indices price is choppy & has no clear indices market trend direction then you should use a tight stop-loss or not open any stock indices trades at all.

7. Indices Chart Time frame - the bigger the stock indices chart time-frame you use, the bigger the stop loss order level should be. If you were a scalper indices trader your indices stop loss orders would be tighter than if you were a indices day trader or a indices swing trader. This is because if you're using longer indices chart timeframes and you determine the stock indices price will be move upwards it doesn't make sense to set a very tight stop because if the stock indices price swings a little your open stock indices order will be hit.

Best Stop Loss Indices Order Strategy for Stock Indices Trading

The method of setting indices trading stop loss orders that you select will greatly depend on what type of indices trader you are. most oftenly used method to determine where to set indices stop loss trading orders is - resistance & support levels. These indices support & resistance levels give good points for setting these stop loss stock indices orders as they are the most reliable levels to set stop loss stock indices orders, because the support & resistance levels will not be hit many times.

Indices Stop-Loss Order

The technique of how to set these indices trading stop loss (SL) orders that you choose should also follow the indices stop-loss trading order setting guide lines above, even if not all these guide lines apply to your indices strategy try to implement the guide-lines that will apply to your indices strategy depending on what type of indices trader you are.

Best Stop Loss Order Indices Strategy – Best Stop Loss Indices Order Strategy for Indices Trading - Setting Indices Stop Loss Order Techniques - Indices Stop Loss Trading Order Example - Indices Stop-Loss Order - Indices Stop Loss Trading Order Calculator